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A.P. Moller - Maersk's results for Q4 were marked by increasing volumes while rates continued to experience downward pressure
A.P. Møller - Mærsk A/S: Interim Report Q4 2023
(DENMARK, 2/9/2024)
The financial results for Q4 2023 were in line with A.P. Moller - Maersk’s revised outlook and continued to show the transition of the business from the peak levels of the COVID-19 years to an environment marked by the increasing overcapacity in the shipping segment, which the Red Sea situation in the last weeks of December did not alter. While a rather stable macroeconomic environment ensured a volume increase in most businesses compared to the low previous year, prices in Ocean continued to be under pressure given the new additions combined with subdued idling and ship recycling activities.
Faced with this environment and in line with previously announced measures, A.P. Moller - Maersk continued to focus on cash preservation measures and reduced its operating costs position with significant improvements in Ocean, Logistics & Services and more generally in SG&A.
Given the uncertainties ahead and in line with the implementation of its Integrator strategy, A.P. Moller – Maersk will exercise a prudent capital allocation. As a consequence, the Board of Directors proposes a dividend of DKK 515 per share, equivalent to a payout of approx. USD 1.2bn and has decided to demerge and spinoff the Svitzer towage activities, which will be subject to approval at an Extraordinary General Meeting in April 2024. As indicated in November 2023, the Board of Directors has decided to immediately suspend the share buy-back programme, with a re-initiation to be reviewed once market conditions in Ocean have settled.
Considering the significant oversupply challenges and high uncertainty about the duration and degree of the Red Sea disruption, A.P. Moller - Maersk expects an underlying EBITDA of USD 1.0bn to 6.0bn, an underlying EBIT of USD -5.0bn to 0.0bn and a free cash flow (FCF) of USD -5.0bn or higher for the full-year 2024, with front-loading towards the start of the year.
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Highlights Q4 2023
A.P. Moller - Maersk's results for Q4 were marked by increasing volumes while rates continued to experience downward pressure, resulting in revenue for Q4 of USD 11.7bn (USD 12.1bn in Q3), a decrease of USD 6.1bn from Q4 2022 led by USD 6.1bn lower revenue in ocean and lower revenue of USD 318 in Logistics & Services with revenue on par in Terminals. EBITDA decreased by USD 5.7bn to USD 839m (USD 1.9bn in Q3), driven by a USD 5.8bn lower contribution from Ocean. EBIT decreased by USD 5.7bn to negative USD 537m (USD 538m in Q3) stemming from Ocean.
 Ocean results turned negative in Q4, in line with expectations following the challenging market development. Volumes increased but from a low base in Q4 2022, due to improved global consumer demand, among other things following the normalisation of the inventory levels in North America. However, the increase in offered capacity in the market continues to put pressure on the rates which developed negatively across geographies with significant decreases as well as compared to Q4 2022, though less dramatically compared to Q3 2023. Cost containment remains a key focus while ensuring quality and reliability of the Ocean products. Logistics & Services business performance continues to be impacted by lower rates, particularly in the air and haulage business, however, with increasing volumes across the business except for warehousing and distribution. Profitability decreased versus previous year and sequentially with a continued emphasis on improving utilisation of assets to protect margins in a lower-rate environment. Profitability was also negatively impacted by restructuring costs. Terminals saw strong volume with like-for-like growth across all regions leading to a higher total revenue despite a normalisation in congestion-related storage. At the same time, total cost remains flat leading to an increase in earnings.
Free cash flow of negative USD 1.7bn (positive USD 6.5bn) declined due to decreased cash flow from operating activities and higher capital expenditures, slightly offset by higher financial income together with sale proceeds and dividends received.[...]
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